In the coming days, the U.S. Senate is expected to cast a final vote on the Social Security Fairness Act, a bill that could provide a much-needed financial boost to nearly 3 million people. This legislation aims to eliminate provisions that have long reduced federal Social Security benefits for those also eligible for pensions from other sources. If passed, the bill could improve the financial outlook for numerous public sector workers, including teachers, firefighters, and police officers, who have been particularly affected by these rules.
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What Is the Social Security Fairness Act?
The Social Security Fairness Act seeks to repeal two provisions that reduce Social Security benefits for individuals who also receive pension payments from non-Social Security-covered employment, such as state, local, and federal government jobs. These provisions—the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO)—have resulted in significantly reduced benefits for public sector workers.
Windfall Elimination Provision (WEP)
The Windfall Elimination Provision modifies the standard Social Security benefit formula for retirees or disabled workers who are also entitled to a pension from jobs not covered by Social Security. These pension payments are often from state or local government systems. As a result, an individual’s Social Security benefit is reduced based on the size of their pension.
Government Pension Offset (GPO)
The Government Pension Offset limits Social Security spousal and survivor benefits for individuals who worked in jobs not covered by Social Security but were eligible for pensions through federal, state, or local government employment. These benefits are typically reduced by two-thirds of the individual’s pension amount.
Who Will Benefit from the Social Security Fairness Act?
Affected Groups
Social Security is generally seen as a universal system, but there are exceptions for certain professions. People who work in the following categories often find their benefits reduced due to the WEP and GPO:
- Civilian federal employees hired before 1984 (covered under the Civil Service Retirement System instead of Social Security).
- State and local government employees who opt out of Social Security and participate in their own pension systems.
- Railroad workers, who are covered under a separate federal insurance program.
- Clergy who can choose to opt out.
According to the Congressional Research Service (CRS), approximately 745,000 people had their benefits reduced by the GPO as of December 2023. About 2.1 million people were affected by the WEP. State and local government employees, who have the option to opt out of Social Security, represent a large segment of those affected.
How Many People Could See Increased Benefits?
If the Social Security Fairness Act is passed, an estimated 3 million individuals, including public sector workers, retirees, and their spouses, could benefit from increased monthly Social Security payments. The legislation would particularly benefit those in state and local government jobs who have opted out of Social Security.
How Much Will Social Security Payments Increase?
According to the Congressional Budget Office (CBO), the changes in the bill could result in an average monthly benefit increase of $360 by December 2025 for those impacted by the WEP. Meanwhile, individuals affected by the GPO could see their benefits rise by an average of $700 per month for those receiving spousal benefits and by $1,190 for surviving spouses. These amounts would continue to grow with Social Security’s annual cost-of-living adjustments.
When Will the Changes Take Effect?
If the Social Security Fairness Act is approved, the changes are expected to be implemented starting January 2024. This means that individuals affected by the WEP and GPO could receive backdated payments.
Will Beneficiaries Need to Take Action?
In most cases, the Social Security Administration (SSA) will automatically adjust primary insurance amounts to account for the changes. However, some beneficiaries may need to take action, especially if they are newly eligible for spousal or survivor benefits. The SSA estimates that approximately 70,000 new beneficiaries will be added by the end of 2033.
The SSA has a toll-free hotline at 1-800-772-1213 and provides various services to assist beneficiaries. However, due to staffing shortages, there could be delays in processing these adjustments, potentially resulting in backlogs.
Potential Fiscal Impact
While the Social Security Fairness Act is widely supported, it has drawn criticism from some conservatives who argue that the changes could put added strain on the Social Security Trust Fund. The CBO estimates that eliminating the WEP and GPO would increase Social Security spending by approximately $198 billion between 2024 and 2034.
However, the changes would also result in estimated savings of $2 billion for the Supplemental Nutrition Assistance Program (SNAP), as some households may see reduced food assistance payments due to the higher Social Security income.
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Conclusion
The passage of the Social Security Fairness Act could mark a significant step toward ensuring fairness for millions of Americans whose benefits have been unfairly reduced due to their participation in public pension systems. With bipartisan support, the bill is set to provide substantial relief to public sector workers, retirees, and their families. As the Senate prepares for its final vote, many are hopeful that the legislation will soon become law, bringing long-awaited changes to the Social Security system.
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